Not Many Options For Cash-Strapped Schools

Last month, Assemblywoman Donna Lupardo wrote to state Comptroller Tom DiNapoli seeking guidance on behalf of several schools in her Southern Tier district that are teetering on the edge of fiscal insolvency and are unclear what options they might have if they do indeed run short of sufficient cash to pay their bills.

Today, DiNapoli’s office responded to the assemblywoman, and the answer is not terribly encouraging.

Basically, according to Deputy Comptroller Steven Hancox, schools facing a fiscal crisis have one of two options: An emergency infusion of state aid, or a state control board. (Unlike municipal governments, schools are not legally allowed to declare bankruptcy).

A variety of Assembly Democrats – including Speaker Sheldon Silver – have been calling for additional education funding in the 2013-14 budget, and it’s a safe bet the one-house bill we’re expecting to see from the conference Monday will include an increase to the 4.4 percent bump Gov. Andrew Cuomo has already proposed.

“Additional state aid would be ideal,” Lupardo said. “That’s something I’m working on in our budget negotiations, through a more equitable funding formula.”

“Fiscal control boards remove local control and would surely be a last resort. In the absence of more state aid, and tangible mandate relief, schools will have to continue making steep budget cuts or borrow funds to meet rising expenses. They could of course try to override the property tax cap, but that is highly unlikely in fiscally strapped communities like ours.”